This annual report documents the wide range of property tax rates in more than 100 US cities and helps explain why they vary so widely.

The Lincoln Institute of Land Policy, in collaboration with the Minnesota Center for Fiscal Excellence, announced the release of its newest 50-State Property Tax Comparison Study for taxes paid in 2023.

The new report estimates the effect of assessment limits that cap annual growth in the assessed value of individual properties and shows how they create large disparities in effective tax rates for owners of similarly valued homes. These limits shift the tax burden away from long-time homeowners and toward owners who recently purchased homes.

The largest disparity evidenced in the report is in Miami, where someone who just purchased a median-valued home would pay nearly three times more than someone who purchased an identical home 12 years ago—the average length of ownership there—despite both homes having an identical value in 2023. The new homeowner would pay $9,205, compared to $3,104 for the long-time owner. In six other cities a newly purchased median-valued home would face an effective tax rate at least twice as high as the rate for an equivalently valued home owned for the average duration in the city. Thirty large cities in the report have assessment limits, and the policy shifts the tax burden to new homeowners in all of them.

“The tax disparities from assessment limits are increasingly a barrier to homeownership,” said Adam H. Langley, associate director of tax policy at the Lincoln Institute. “The added property tax burden placed on new homeowners comes on top of sharp increases in mortgage costs in recent years. Assessment limits also make existing owners less likely to move if it would mean giving up tax savings accrued under those limits, which further constrains the supply of entry-level homes available for purchase and drives up prices.”

In addition to highlighting disparities created by assessment limits, this report provides the most meaningful data available to compare cities’ property taxes by calculating the effective tax rate: the tax bill as a percentage of a property’s market value. Data are available for 74 large US cities and a rural municipality in each state, with information on four different property types (homestead, commercial, industrial, and apartment properties), and statistics on both net tax bills (i.e., $3,000) and effective tax rates (i.e., 1.5 percent).

The study found that the average effective tax rate on a median-valued homestead was 1.29 percent in 2023 for the largest city in each state, with Detroit, Newark, Bridgeport (CT), and Aurora* (IL) all having effective tax rates at least twice the average. Conversely, eight cities have tax rates that are half the study average or less, led by Honolulu, Charleston (SC), Boston, Salt Lake City, and Denver. The average effective tax rate for this group of large cities fell 2.5 percent between 2022 and 2023—from 1.32 percent to 1.29 percent—and nearly twice as many cities had decreases (33) than increases (17).

Highest and Lowest Effective Property Tax Rates on a Median–Valued Home (2023) 

Commercial property tax rates on office buildings and similar properties also vary significantly across cities. The effective tax rate on a $1 million commercial property averaged 1.81 percent across the largest cities in each state. The highest rates are in Detroit and Chicago, where rates are more than twice the average for this group of cities. Rates are less than half that average in Cheyenne (WY), Charlotte, Seattle, Boise, and Wilmington (DE). The average commercial tax rate for the 53 cities fell 1.5 percent between 2022 and 2023, with declines in 30 cities.

Highest and Lowest Effective Property Tax Rates on $1 Million Commercial Property

The Lincoln Institute provides more evidence on assessment limits in the Policy Focus Report on Property Tax Assessment Limits, and highlights better approaches to property tax relief in Policy Focus Reports on Property Tax Relief for Homeowners and Rethinking the Property Tax–School Funding Dilemma.

The 50-State Property Tax Comparison Study is available for download on the Lincoln Institute website.

Lead image: Residential homes in Key West, Florida. Credit: Lisa-Blue via iStock/Getty Images Plus.

A recent study from the Lancet found that by the start of the next century, more than half of all births will occur in sub-Saharan Africa. Thanks to higher fertility rates and longer life expectancies, the continent’s population is on track to nearly double to 2.4 billion by 2050, then nearly double again, to 4.2 billion by 2100.

Within Africa, intermediary cities (noncapital cities, typically with a population of 1 million or fewer) are the fastest growing urban places. Between 2022 and 2030, intermediary cities are expected to account for nearly 50 percent of Africa’s overall urban population growth, and this growth will occur largely in cities that currently have fewer than 1 million people. For example, Zinder, the third-largest city in Niger, is expected to more than double its population between 2020 and 2035, growing from about a half-million to over 1 million residents.

The implications of this tremendous growth for people, communities, economies, and the environment are extraordinary, made even more complex by the impacts of climate change and climate migration.

A recent collaboration between the Lincoln Institute of Land Policy and Challenge Works investigated ways to support effective land use planning, infrastructure investments, land-based financing, and disaster resilience in rapidly growing intermediary cities in Africa. We used a mixed-methods approach that synthesizes literature reviews, interviews with urban policy experts and city officials, and specialist workshops.

We explored:

• the main goals of intermediary cities in Africa when it comes to managing growth;
• the barriers preventing such cities from using data-driven planning, mapping, and land-based financing tools; and
• how a challenge prize could accelerate the creation and scaling of such tools.

Below, we summarize some of the things we learned, and how we plan to take the idea of a challenge prize forward.

Growth is not inherently bad—but can have unintended consequences if not managed.

Often, with population growth comes economic opportunity and improved quality of life. More and better jobs, more economic mobility, and better access to health care, education, and sanitation are among the benefits of population growth.

However, we wanted to dig into questions of land use and infrastructure development knowing that:

• climate vulnerability risks are highest in rapidly growing cities;
• climate change will disproportionately impact people in rapidly urbanizing countries, particularly groups that are already vulnerable;
• the cost of retrofitting infrastructure in informal settlements is three times more expensive than new infrastructure development; and
• with two-thirds of African cities yet to be built, a small window of opportunity exists to make the necessary investments to support future growth patterns based on sustainable and equitable development principles.

Land use planning in intermediary cities is critical to creating more sustainable futures.

In speaking with city leaders and experts within government, NGOs, and industry working in this space, we learned that land use planning has different inputs, outputs, and outcomes. When these are integrated, a virtuous cycle can occur:

• cities can use evidence and insights to inform plans and policies;
• evidence-based, implementable plans that are created with input from diverse stakeholders are more likely to be enforced and lead to better outcomes; and
• this increases the level of trust and evidence available to inform new plans and policies.

The enabling ecosystem—which includes elements like institutional capacity to develop and implement plans, political dynamics, human capacity and skills, funding, cultural norms, and more—also plays an important role in creating and implementing land use plans (or conversely, limiting or obstructing progress).

We also learned that the loop can become ineffective for a number of reasons, which are generally attributed to two primary gaps: first, when effective, evidence-based land use plans are not created, due to organizational barriers (things like internal government silos or lack of planning capacity), political and economic barriers (things like political cycles and competition for resources), and technical barriers (such as lack of quality, up-to-date data); and second, when completed land use plans are not implemented, again due to organizational barriers (like complex land tenure), political and economic barriers (limited authority or resource to implement plans), and technical barriers (lack of local buy-in or weak enforcement powers).

Innovation has the potential to both address pain points within those gaps and strengthen the enabling ecosystem.

For example, we’ve identified city-specific use cases to create context-sensitive solutions that use data analytics to better plan for future mobility needs and transport infrastructure, or to better predict climate risk vulnerabilities and therefore inform land use regulations; apply crowdsourced data and citizen-sensing techniques to create and implement inclusive, equitable land use plans; or examine and collate property registration and valuations to bolster municipal finances and the use of land-based financial tools.

At the ecosystem level, creating new tools or adapting tools to the local context can help organizations leapfrog over traditional planning systems and catalyze new practices, and bring together government agencies or organizations that would not normally collaborate.

Tech solutions can help—but need to be paired with institutional enablers.

While our investigations confirmed the exciting potential for data-driven, digital technologies to help city leaders reduce risk and make more informed decisions, we also learned that new data collection and analysis tools are only as good as the planning and implementation processes they inform. Data-driven tools need to be developed in ways that are people-centered, inclusive, and fair, and are ineffective if they aren’t supported by an enabling ecosystem to implement and update effective plans.

Solutions that pair technical innovation with institutional innovation will enable intermediary cities in Africa to pioneer methods to manage growth in ways that are contextually appropriate and don’t yet exist.

A challenge prize can help spark and scale up solutions.

We propose to run an open innovation challenge in partnership with rapidly growing African intermediary cities. Such a challenge would invite innovators to create, test, and scale solutions to manage rapid growth. The challenge structure is based on partnering with cities to create an open call to innovators, oriented around a specific city use case, which will then work closely with city stakeholders to create custom, locally relevant solutions.

The challenge will include these fundamental features:

• Centering the challenge around opportunities cities want to address. Innovators will respond to challenge statements that reflect the goals cities want to achieve. This is different from, and complementary to, innovation funding approaches that focus on specific technologies or methods.
• Prioritizing scalable and replicable solutions. Our research revealed a number of promising innovations that are already being piloted and implemented in real-world settings. Despite this, scaling solutions remains a barrier. For instance, innovators who have the right data analytics solution may not have access to the permissions needed to test it in the real world, or the relationships to introduce it in places that need innovation. Local governments may not be prepared to adopt and maintain services. The challenge will be designed to address scaling barriers through seed funding, capacity-building, new business models, and access to customers, investors, and networks.
• Providing appropriate incentives and support for innovators to experiment and take risks. The outcome-based, stage-gated funding model of an innovation challenge means that innovators can experiment, while cities can benefit from crowding in a variety of ideas and expertise. Having access to both financial and nonfinancial support enables innovators to develop solutions in ways they might not be able to otherwise.
• Shaping and accelerating innovation in land use planning. By supporting multiple innovators working across multiple use cases and settings, the challenge can accelerate progress in the field of land use planning, as well as steer innovation in a direction more attuned to the needs of rapidly growing cities in low- and middle-income countries.

The time is now.

Africa is both the cradle of civilization and the world’s youngest continent, with half the population under the age of 19. The continent is also facing critical risks related to climate change and associated implications to disaster resilience, food and water security, energy supplies, and more. To ensure that future city growth in Africa is inclusive, equitable, sustainable, and resilient to changing conditions, we urgently need to take action now to accelerate and scale new models to manage growth. Our next steps are to assemble the partners to implement the next stage of the challenge. If you are interested in contributing, get in touch!

With sincere thanks to Stefan Chavez-Norgaard, Teodora Chis, Astrid Haas, Peter Oborn, and the many policy experts, development practitioners, city officials, tech innovators, and others who provided their insights and experiences to shape this program.

Lead image: City market street in Lagos, Nigeria, West Africa. Credit: peeterv via iStock/Getty Images Plus.